Not long ago, Zhao Danyang mentioned the Vietnamese stock market and expressed his bullishness, which made the market involved in this fund brother just happen to be very concerned in China. Of course, each person has his own opinions on the Vietnamese stock market, but it has indeed made another group of Chinese people interested in investing in the Vietnamese stock market. Of course, not everyone has the time and motivation to open an account in Vietnam, although it is actually very simple for Chinese people to open an account in the Vietnamese stock market now. So, many friends' first reaction was: ETF. Yes, there are currently Vietnam-themed ETFs in the Hong Kong and the US markets, and the code in the US is VNM.
However, many friends also have doubts, that is, look at the trend of this ETF in the past three years:
is not very good, especially the recent trend is also dull, can you brag about this? Of course, some friends will further ask, look at the benchmark index similar to the Shanghai Stock Exchange in Vietnam, Ho Chi Minh index:
is wrong, the Vietnamese stock market is indeed upward, has this fund VNM run to a "parallel space" in the Vietnamese stock market? Yes, this is also a problem I encounter from time to time. Why is the trend of VNM diverging from the Vietnamese market? Today, let me try to give you a qualitative analysis.
Let us put the trend of the Ho Chi Minh Index and the VNM trend together:
This is the trend from 2016 to this year. The weekly K chart above corresponds to the Ho Chi Minh Index, and the blue line is the trend of VNM. It can be seen that the Vietnam market is indeed strong, but the performance of VNM is indeed sluggish, with the difference between the two being more than 30 points.
Some friends may immediately think of a possible reason, in the US market, investing in Vietnamese stock market, exchange US dollars for VND , Vietnamese dong assets are denominated in US dollars, exchange rate ! Yes, this is the easiest thing to think about. Did the VND depreciate significantly against the US dollar during this process? Let’s take a look now:
Look at the situation of the US dollar against the Vietnamese dong during the same period. You can see that during the period, the maximum appreciation rate of the US dollar against the Vietnamese dong was only more than 2%, and it was even more stable in 2017. It seems that the exchange rate is not the reason.
is OK, let’s go back to the true nature of this product. This ETF is issued by VanEck. On its company homepage, we can see the product introduction and description.
We can see a lot of information, that is, this fund invests in local Vietnamese companies, or listed companies outside the Vietnamese market but 50% of the revenue or related assets are generated from Vietnam. At the same time, the index code linked to the fund is: MVVNMTR.
From the distribution of fund investment countries and regions, we can see that 25% of the assets are outside the Vietnamese market, but more than 50% of their businesses involve Vietnam. So, first of all, we can see that VNM is not a pure Vietnamese stock market fund.
But after all, 75% is in the Vietnamese stock market. We need to grasp the main contradictions and continue to follow this index code MVVNMTR. This index is actually a product of the index issuer MVIS. The full name is: MVIS Vietnam Total Return Net Index. It has further introduced on its official website:
The market value of the company it invests in is more than US$150 million. After all, the Vietnamese stock market is not as good as US$100 million and A-shares. There are a lot of large companies. Here, companies with more than US$1 billion can be called blue chips. At the same time, we should pay special attention to this feature: the proportion of each company is limited to less than 8%. Why? Here we start with the characteristics of the Vietnam stock market.
Like China, Vietnam's regulatory authorities have some restrictions on foreign investment in the local stock market, but overall, as a small country, it is often more open. In terms of current restrictions, Vietnam and China have a different strategy, which is that it welcomes overseas funds, but the proportion of foreign capital in different types of stocks is different. If it is A-shares, just limit it. For example, Vanke has RMB 290 billion. Even if foreign capital is limited to 30%, it will be US$13 billion. For a fund like VNM with less than US$300 million and more overseas institutions, it is enough to make a fortune.However, the Vietnamese stock market is different. It is a small market with limited liquidity. In the first nine months of this year, the total market value of the three major exchanges in Vietnam increased by 67% compared with 2016, and the total market value is only US$120 billion, which is more than a quarter of Alibaba's. In this case, all overseas institutions have limited space, especially as a single fund.
Therefore, this index needs to be restricted, and VNM itself is also difficult to invest in the Vietnamese market, especially in this round of Vietnamese market, mainly blue-chip large-cap stocks, especially the Vietnam VN30 index. It is even more difficult for foreign capital to compete for chips for these blue-chip stocks .
What impact will this have? Look at the components:
These companies may be dizzy. Let me give you an example. There is a Vietnam Dairy in it. This is Vietnam's famous super blue chip: Vietnam Milk. Coincidentally, this stock has a local code in the Vietnamese stock market. Since its listing in 2012, it has risen by 270% in about five years, and its market value is around US$9.5 billion. It is logical that the proportion of this fund with only 25 Vietnamese stocks should be greater, but it is also bound to 8%, which is similar to other Vietnamese listed companies with a market value of US$1 to US$2 billion. This greatly limits the pulling effect of these blue-chip bull stocks on the index.
let us shorten the comparison between Vietnam's Ho Chi Minh Index and VNM to this year:
can see a difference of about 8%. At the same time, we can see that the gap between VNM and Ho Chi Minh Index is mainly when it falls, especially in August this year, the Vietnamese stock market experienced a round of deep adjustments, lasting about 3 weeks. In this process, consumer stocks such as Vietnam Milk performed relatively steadily and resistant to declines, and financial sectors such as banks and securities led the decline.
. Among the components of VNM, the financial sector accounts for a large proportion. Their market value is much different than that of Vietnamese milk, but the actual shares in the fund are not that big, which also allows the blue-chip anti-decline stocks in the fund to play a full role in the Ho Chi Minh Index. However, the role in this fund is limited, which makes VNM fall even worse during adjustments.
The picture above is some of the largest market value in Vietnam stocks. Compared with the components of VNM, you can also find that there is another big problem with it. A round of listing waves of high-quality Vietnamese companies started at the end of last year, and many components have not been included in VNM.
For example, Saigon beer, with a market value of US$7.5 billion, local code: SAB (the stock price in the figure below has been converted into US dollars):
star company listed this year, which is the legendary "bikini aviation" Vietjet airline , with a market value of US$2.1 billion:
These large-cap stocks of the Ho Chi Minh Index have increased by more than the market this year. VNM failed to include these stocks, so it naturally lacks a lot of fuel for rising.
comprehensively, we can find that the VNM-linked index, as an index tracking emerging markets, has a slow change feature. In addition, some restrictions on the Vietnamese market itself make it fail to reflect the vitality of the Vietnamese market in a timely manner. In fact, although the Vietnamese stock market has been established for a long time and there was a crazy bull market before 2008, it has been quiet for a long time after the financial crisis. In recent years, with the rapid development of Vietnam's economy and the needs of Vietnam's economic reform, the development of the capital market has also accelerated. For example, the Vietnamese government has been continuously promoting the listing of state-owned enterprises over the past year, and even formulated a roadmap and increased the scope of its capital opening to foreign capital. In the future, more high-quality companies may go public, and they also need to open their arms to their domestic and foreign funds. This year, Vietnam also officially launched stock index futures, enriching the varieties of its capital market. Therefore, if VNM wants to keep up with the Vietnamese market in terms of performance, it needs to respond faster. Especially in the context of the overall increase in Vietnam's capital market opening up to foreign capital, timely inclusion of some high-quality new stocks, especially blue-chip stocks, will be the key to its "turnaround".
